In every case, early organization of the required documents is an essential part to speed up the loan process. But it is possible to wait until the purchase contract is already signed. However, experience has shown that the available period from contract signing until the transfer of ownership is calculated to be relatively short, so it is more reasonable and important to take care of all documents in advance.
Since the documents differ for every bank and for every applicant it is advisable to gather information first-hand. We have summarized for you what may be generally required as evidence and what you need to look for. We have divided this information into three categories:
Those who can prove that they have taken on liabilities and paid them back punctually or early have the best credit in the USA. In the U.S. this is a way of showing that one not only can pay back the money but actually will do so.
The verification: The banks require three letters of reference from banks and/or credit card companies. If possible these references should also include the maximum allowed limit for the outstanding balance, how much the monthly payments are and of course that everything was always paid properly. If there are no proven records of payment obligations, a general letter about a perfect business relationship is sufficient.
For a loan approval, the U.S. banks determine how you qualify for a specific payment based on "Ratios". These are the revenue-expenditure ratios considering certain key figures. This means that banks check to make sure that all expenditures (living and contractual liabilities) generally do not make up more than approx. 35% of gross revenue. For salaried borrowers the current income is used for this. For self employed borrowers, due to possible economic fluctuations, the average of the two previous years and the current year is used.
The verification: For those who are self-employed, a written statement by the independent accountant stating when the borrower started in business and in what industry as well as the percentage of ownership in the company. In addition the gross income of the past two years and the current year to date (approximately) are estimated. If the borrower is in an employment relationship, the corresponding letter from the employer including the current income, the assurance that the employee is in an active employment status, and possibly pay check stubs. In some cases the last three years of tax assessments/returns may be required.
The U.S. banks are obligated by law to ask for the origin of the equity otherwise known as down payment. In all cases complete statements must be submitted within 60 days.
The verification: If the money has already been in the account or in a depository for 60 days this provides enough verification. The prior two months of all pages of the statements will be required. If the money was just deposited or transferred, the origin must additionally be documented. For example, this could be the sale of a house (Notary contract for sale), taking a loan with a European bank (Credit contract), the dissolution of a life insurance (verification by the insurance company) or another source which can be documented. What the banks do not accept as evidence: Monetary gifts by third parties and cash deposits. Borrowers who keep their money in safes, for example, should therefore deposit the money timely into an account (Europe or USA) to allow it to remain there for 60 days.
Often times additional supporting documents have to be provided in order to support the information stated above or in order to complete each borrower´s profile. The best form of preparation includes a personal meeting/telephone conversation with your Paul Finance representative. Following the conversation, a personal list of the required documents specific to your approval with corresponding form letters will be provided. It would be best if you requested such a list including the form letters prior to your trip to the United States.